Memory Tips for Long and Short Calls and Puts
Step 1 Remember your basic math at school:
| + + | = | + |
| + - | = | - |
| - + | = | - |
| - - | = | + |
Step 2 Think buying something as a + and selling something as a –, therefore:
Buying a call would be a + +
Selling a call would be a − +
Buying a put would be a + −
Selling a put would be a − −
Step 3 Remember your risk profiles:
Where you end up with a + risk profile, the diagonal line will be upward from left to right.
Where you end up with a - risk profile, the diagonal line will be downward from left to right.
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